YouTube's Skippable Ads Could Command a Premium

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YouTube's Skippable Ads Could Command a Premium

Google launched a "small test of skippable pre-roll" video advertisements on YouTube that asks users to "opt in" to advertisements by not opting out using a skip button in the upper right corner of the viewing area, potentially making them more valuable to advertisers.

Directors of commercials will need to up their games if they want to compete for our attention with that skip button. YouTube's experiments with in-stream advertisements as early as 2007 revealed that as many as 70 percent of viewers abandoned videos when confronted by long, irrelevant pre-roll advertisements that play before a video.

However, more recent experiments showed that well-made, highly-targeted, 15-second pre-roll advertisements only caused 15 percent of viewers to leave the site, according to a blog post by YouTube employees involved with the project. They hope the same 85 percent of viewers who chose to sit through the most engaging advertisements, rather than closing their browser windows, will also choose not to skip these new ads – even when given the option to proceed directly to their requested videos.

"Creative matters a lot," writes the team. "The quality and relevance of the ad itself seems to have 3x the influence on abandonment online as it does on TV. Viewers online tend to be much more active in making choices about what they watch."

YouTube says other tests indicate that "advertisers are often willing to pay more money for an engaged opt-in view, as opposed to a forced view like an in-stream ad, so this also has the potential to increase CPMs," referring to the fee advertisers pay publishers for each thousand views.

Advertisers and publishers have long employed a similar strategy in designing splash pages that display for a few seconds as a website loads, often with a skip button that makes them disappear. Applying the same approach to video – especially if YouTube's instincts are right about advertisers paying a premium – could push YouTube ever-closer to the profitability tipping point.